Release Date: January 29, 2014
For immediate release
Information received
since the Federal Open Market Committee
met in December indicates that
growth in economic activity picked up
in recent quarters.
Labor market indicators were mixed
but on balance showed further improvement.
The unemployment rate declined
but remains elevated.
Household spending and
business fixed investment advanced
more quickly in recent months,
while the recovery in the housing
sector slowed somewhat.
Fiscal policy is restraining economic growth,
although the extent of restraint is diminishing.
Inflation has been running below
the Committee's longer-run objective,
but longer-term inflation expectations
have remained stable.
Consistent with its statutory mandate,
the Committee seeks to foster maximum
employment and price stability.
The Committee expects that,
with appropriate policy accommodation,
economic activity will expand
at a moderate pace and the unemployment
rate will gradually decline toward levels
the Committee judges consistent with
its dual mandate.
The Committee sees the risks to the
outlook for the economy and the labor
market as having become more nearly balanced.
The Committee recognizes that inflation
persistently below its 2 percent objective
could pose risks to economic performance,
and it is monitoring inflation developments
carefully for evidence that inflation will
move back toward its objective over
the medium term.
Taking into account the extent of federal
fiscal retrenchment since the inception of
its current asset purchase program,
the Committee continues to see
the improvement in economic activity
and labor market conditions over that
period as consistent with growing
underlying strength in the broader economy.
In light of the cumulative progress toward
maximum employment and the improvement
in the outlook for labor market conditions,
the Committee decided to make a further
measured reduction in the pace of
its asset purchases.
Beginning in February,
the Committee will add to its
holdings of agency mortgage-backed
securities at a pace of $30 billion per month
rather than $35 billion per month, and
will add to its holdings of longer-term
Treasury securities at a pace of $35 billion
per month rather than $40 billion per month.
The Committee is maintaining its existing
policy of reinvesting principal payments
from its holdings of agency debt and
agency mortgage-backed securities
in agency mortgage-backed securities
and of rolling over maturing
Treasury securities at auction.
The Committee's sizable and still-increasing
holdings of longer-term securities should
maintain downward pressure on longer-term
interest rates, support mortgage markets,
and help to make broader financial conditions
more accommodative, which in turn should
promote a stronger economic recovery and
help to ensure that inflation, over time,
is at the rate most consistent with
the Committee's dual mandate.
The Committee will closely monitor
incoming information on economic and
financial developments in coming months
and will continue its purchases of
Treasury and agency mortgage-backed
securities, and employ its other policy
tools as appropriate, until the outlook
for the labor market has improved
substantially in a context of price stability.
If incoming information broadly supports
the Committee's expectation of ongoing
improvement in labor market conditions
and inflation moving back toward
its longer-run objective, the Committee
will likely reduce the pace of asset purchases
in further measured steps at future meetings.
However, asset purchases are
not on a preset course, and the Committee's
decisions about their pace will remain
contingent on the Committee's outlook
for the labor market and inflation as well as
its assessment of the likely efficacy and
costs of such purchases.
To support continued progress toward
maximum employment and price stability,
the Committee today reaffirmed its view
that a highly accommodative stance of
monetary policy will remain appropriate
for a considerable time after the asset
purchase program ends and the economic
recovery strengthens. The Committee also
reaffirmed its expectation that the current
exceptionally low target range for the
federal funds rate of 0 to 1/4 percent
will be appropriate at least as long as
the unemployment rate remains
above 6-1/2 percent, inflation between
one and two years ahead is projected
to be no more than a half percentage
point above the Committee's 2 percent
longer-run goal, and longer-term inflation
expectations continue to be well anchored.
In determining how long to maintain a highly
accommodative stance of monetary policy,
the Committee will also consider other
information, including additional measures
of labor market conditions, indicators of
inflation pressures and inflation expectations,
and readings on financial developments.
The Committee continues to anticipate,
based on its assessment of these factors,
that it likely will be appropriate to maintain
the current target range for the federal
funds rate well past the time that the
unemployment rate declines below 6-1/2 percent,
especially if projected inflation continues
to run below the Committee's 2 percent
longer-run goal. When the Committee
decides to begin to remove policy accommodation,
it will take a balanced approach consistent with
its longer-run goals of maximum employment
and inflation of 2 percent.
Voting for the FOMC monetary
policy action were:
Ben S. Bernanke, Chairman;
William C. Dudley, Vice Chairman;
Richard W. Fisher;
Narayana Kocherlakota;
Sandra Pianalto;
Charles I. Plosser;
Jerome H. Powell;
Jeremy C. Stein;
Daniel K. Tarullo;
and
Janet L. Yellen.
Statement Regarding Purchases of
Treasury Securities and Agency
Mortgage-Backed Securities 
